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  2. 2. Book Building & Fixed Price Issues  Fixed Price Issues  Book Building Issues
  3. 3. ssue Type Offer Price Demand Payment Reservations Fixed Price Issues Price at which the securities are offered and would be allotted is made known in advance to the investors 100 % advance Demand for the payment is securities offered required to be is known only made by the after the closure investors at the of the issue time of application. 50 % of the shares offered are reserved for applications below Rs. 1 lakh and the balance for higher amount applications. Book Building Issues A 20 % price band is offered by the issuer within which investors are allowed to bid and the final price is determined by the issuer only after closure of the bidding. 10 % advance payment is Demand for the required to be securities offered made by the , and at various QIBs along with prices, is the application, available on a while other real time basis categories of on the BSE investors have to website during pay 100 % the bidding advance along period.. with the application. 50 % of shares offered are reserved for QIBS, 35 % for small investors and the balance for all other investors.
  4. 4. About Book Building  The issue price is determined after the bid closure based on the demand generated in the process.
  5. 5. The Process:  The Issuer who is planning an offer nominates lead merchant banker(s) as 'book runners'.  The Issuer specifies the number of securities to be issued and the price band for the bids.  The Issuer also appoints syndicate members with whom orders are to be placed by the investors.  The syndicate members input the orders into an 'electronic book'. This process is called 'bidding' and is similar to open auction.  The book normally remains open for a period of 5 days.  Bids have to be entered within the specified price band.  Bids can be revised by the bidders before the book closes.  On the close of the book building period, the book runners evaluate the bids on the basis of the demand at various price levels.  The book runners and the Issuer decide the final price at which the securities shall be issued.  Generally, the number of shares are fixed, the issue size gets frozen based on the final price per
  6. 6. Guidelines for Book Building  Rules governing Book building are covered in Chapter XI of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000.
  7. 7. RIGHTS ISSUE  Rights issue is governed by Section 81(1) of the Companies Act, 1956  The securities are offered to the existing shareholders of the Company through letter of offer  “Rights Issue” means an offer of specified securities by a listed issuer to the shareholders of the issuer as on the record date fixed for the said purpose
  8. 8.  A listed issuer making a rights issue shall announce a record date for the purpose of determining the shareholders eligible to apply for specified securities in the proposed rights issue.
  9. 9. LETTER OF OFFER  The abridged letter of offer, along with application form, shall be dispatched through registered post or speed post to all the existing shareholders at least three days before the date of opening of the issue.  Provided that the letter of offer shall be given by the issuer or lead merchant banker to any existing shareholder who has made a request in this regard.
  10. 10. PROCEDURE FOR RIGHTS ISSUE  Increase authorized capital, if required .  Notify SE about the BM at least before 2 days when rights     issue is proposed. BM to decide quantum and proportion of rights issue, record date, appointment of merchant bankers, authority to undertake process and signature on Letter of Offer. Forward Letter of Offers to SE and dispatch to shareholders. Arrangement with Bankers to receive application forms Prepare Basis of Allotment
  11. 11.  Allotment in BM .  Application for listing with SE and filing with ROC.  3 day and 50 day monitoring report